HEAD-TO-HEAD: Allianz GI versus Franklin Templeton

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Thomas DeFauw, Morningstar

Introduction

Mutual fund investors in Hong Kong and Singapore have shifted their attention to allocation (mixed asset) funds, as they look for more diversity and stability amid volatile equity markets.

Allocation funds attracted $15bn of new money for the first half of the year, reversing the $15.5bn net outflow throughout last year, Morningstar Direct data shows

These funds – also known as “balanced” — typically have 50% to 70% of exposure in equities and the remainder in fixed income and cash.

“More investors preferred global mixed-asset strategies, with strong inflows into the moderate allocation category,” said Kate Lin from the Morningstar editorial research.

“This balanced approach enables investors to capture both capital appreciation and income from stocks, bonds and cash.”

Although equity funds remained the most popular broad category during the first half of this year, inflows dropped to $26.8bn in the second quarter, compared with $53bn in the first quarter.

Fixed incomes funds, on the other hand, continued to suffer the most outflows, with US dollar hedged global corporate bonds reporting an outflow of $2.5bn in the second quarter – albeit less than the $6.7bn of outflows during the first three months of 2021.

“Either reinvesting coupons earned from securities or distributing a portion of the fund– appeal to many investors,” said Lin. “Three of the top five categories on inflow were income-generating funds, with a bond or an allocation strategy.”

Against this background, FSA asked, Thomas DeFauw, Amsterdam-based manager research analyst at Morningstar, to select two moderate allocation products for comparison: the Allianz Income and Growth Fund and the Franklin Income Fund.

Source: FE Fundinfo, Morningstar. Data in US dollars.

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